Cape Town - The best way to describe the current state of the South African economy is directionless, economist Mike Schüssler, chief economist at Economists dotcoza, told Fin24 on Wednesday.
"We have a very weak economy and the chances of a downgrade are probably increasing right now as SA's economy is not growing faster than our population," he said.
"The SA economy is a bit schizophrenic. January was a total slaughter, February was great, March was a slaughter house and April brilliant. It is like one step forward and one step back - directionless."
In commenting on the August BankservAfrica Economic Transaction Index (Beti), Schüssler said it shows a 1.4% year-on-year change – significantly higher than the -0.2% experienced in July. The index measures all SA interbank transactions under R5m.
On a month-on-month basis, August achieved a 0.6% growth – indicating some recovery. However, this was still a decline on a three-month average basis. As the Beti is regarded as a good indicator of underlying growth trends in the SA economy, it suggests, according to Schüssler, that uncertainty at present is amplified when translated into economic growth.
"The one thing becoming clear to me when I look at monthly and quarterly numbers, is that SA has 'an up and down economy'. Ultimately the economy only grew 0.6% year-on-year," he said.
"SA is now below the global average income level. We need to grow faster, but we are not catching up. Consumers are struggling and business confidence is better, but still negative."
According to Dr Caroline Belrose, head of fraud and data analytics at BankservAfrica, most of the improvement in the latest index had to do with the low base established in the middle of 2015, when the economy was at a very weak point. On a six-month view, the August level is still below that of February, for instance.
She added that the index shows that the number of transactions grew at the fastest pace in more than three years at 8.6%. The average value of the transactions grew at 1.5% only. In real terms, this has declined over the last seven months – an indication of economic stress.
The standardised value of the BETI reached R769.9bn in August 2016. It grew by 9.5% - the strongest growth in nominal terms since August 2013. After inflation is taken into account, the value improvement is similar to November and August 2015.
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